GM has no need for merger, Barra says

DETROIT • General Motors Co. chief executive Mary Barra would rather go it alone and prove that her company can make fat returns with its own cars rather than go after a big merger deal.

Her plan is to invest in long-held brands such as Chevrolet and Cadillac and make a comeback in struggling markets such as South America and Europe.

Joining up in a big deal as has been suggested by Fiat Chrysler Automobiles NV CEO Sergio Marchionne? That would be a distraction, she said.

“We have articulated a very detailed plan to become the most-valued automaker,” Barra said. “We’re working hard on it and we’re not going to let anything distract us.” She hasn’t met with Marchionne about consolidation, she said.

Barra’s comments come after Marchionne said last week the industry needed to consolidate to improve returns for shareholders. Marchionne has said that GM would be a “feasible” merger partner. Last week after FCA issued earnings, Marchionne argued for mergers in the industry.

GM increased its capital spending by 20 per cent to US$9 billion a year to get competitive with other carmakers, she said. At the same time, she is cutting back in markets where returns are weak.

GM is pulling most of its mass-market cars from Russia amid heavy losses. But the company is keeping its St. Petersburg plant — set to be shuttered by mid-year — in case the market comes back, said James DeLuca, GM’s executive vicepresident of manufacturing.

Barra said GM, which reported record global sales of 9.9 million vehicles last year, has plenty of scale on its own. GM trailed only Toyota Motor Corp. and Volkswagen AG in the number of autos made or sold in 2014. She made the comments at an event Monday at GM’s Chevrolet Malibu plant in Kansas City, Kansas, where the company was celebrating its 500 millionth vehicle produced.

She pointed out that GM has partnerships where it needs them, such as a joint venture with Chinese automaker SAIC Motor Corp. and a hydrogen fuel-cell partnership with Honda Motor Co. GM and SAIC also have a partnerships in China with Liuzhou Wuling Motors Co.

“I don’t see any advantage of GM merging with Fiat Chrysler,” said Michelle Krebs, a senior analyst at Autotrader. com. “We’ve looked at this exercise before and it didn’t make sense then and I don’t think it makes a lot of sense for GM now.”

GM already has sufficient brands to manage, she said.

“Fiat Chrysler is certainly in need of some sort of support because they don’t have the deep pockets that other automakers do,” Krebs said.